The Indomitable Mary Meeker

Mary Meeker
Photo: Joe Pugliese

There is no president of the Internet. But there is a queen. That only-somewhat-exaggerated sobriquet belongs to Mary Meeker, the 53-year-old financial analyst turned venture capitalist. Back in 1995, Meeker—then an analyst at Morgan Stanley—foresaw how a wave of unprecedented innovation was going to change lives and create enormous wealth. She summarized her views in a landmark report that instantly secured her reputation as the Nostradamus of technology.

As a financial analyst, Meeker helped Morgan Stanley snare major IPOs—Netscape, Priceline, and Google—and recommended bonanzas like Amazon, AOL, Intuit, and Dell. After the first Internet boom went bust, some of her fellow analysts drew penalties and fines for cynically touting stocks they privately disdained. But Meeker remained unscathed, in part because she always believed in what she was selling. Even after the crash, she kept that faith, insisting on the value of some tech stocks when stung investors had lost heart. Those who followed her advice—to stick with Amazon, for instance—profited handsomely.

Now everybody listens. Since the mid-2000s, her annual info-packed presentation on the state of the Internet has become a tech industry event in its own right. Meeker has nailed the most important dynamics of the tech and investment climate, from the spread of mobile computing to the rise of China. She gave her most recent address—99 slides in about 19 minutes—at last May’s All Things Digital conference. In it, she focused on the idea that nearly every conceivable human activity was in the process of being transformed—connectivity (mobile phones), cash registers (Square), manufacturing (3-D printers), window shopping (decor site One Kings Lane), and even education (Codecademy). Her Majesty dubbed this trend “the reimagination of everything.”

Meeker reimagined her own life in 2011, when after two decades on Wall Street she became a venture capitalist, moving to the leafy Sand Hill Road headquarters of estimable VC firm Kleiner Perkins Caufield & Byers to head its billion-dollar Digital Growth Fund. She has made bets on high-profile startups like Square, Spotify, and Twitter as well as under-the-radar plays like Lending Club, DocuSign, and Waze. She met with wired at KPCB’s headquarters, pulling up a decade’s worth of her trademark reports on her omnipresent iPad to back up her points.

Wired: Every year you put together a report on Internet trends. Do trends emerge as you do the research, or do you collect a bunch of figures to confirm what you already think is going on?

Mary Meeker: It’s a combination. For instance, last winter I was walking around Kleiner and peeked into one of these glass-walled conference rooms. There were a handful of engineers talking to one of our venture capitalists, and I saw the word beauty in their presentation. I’d never seen a couple of engineers in flannel shirts—guys—with the word beauty on a PowerPoint slide. Just never seen it before. Later I was walking around the building and saw another slide that had beautification on it. Same thing, same day. I went, “Wow, that’s unusual.” So as the marriage of design and technology kept popping up, it became clear to me there was a bigger theme here.

Meeker: I agree. And here’s another thing that we noticed this year: People wanted to try the apps I mentioned in the presentation.

Wired: You gushed about the traffic app Waze so much it was almost like you were a commercial spokesperson.

Meeker: We are investors. I love the app. It just hit 20 million users. I’ve used it in New York state and Michigan and Colorado and Turkey. It’s like having a videogame in your hand.

Wired: Do you ever invest based on your personal affection for a particular product?

Meeker: I’ve made my best personal investments when I’ve been a user of the product. Like Apple. The epiphany for me came when I purchased my fifth iPod and I hadn’t unwrapped my fourth. It was still in the plastic case.

Wired: What was your biggest success from that strategy?

Meeker: Personally? Amazon. Intuit. eBay.

Wired: Did you get hooked on eBay?

Meeker: Yes. A captivating moment was when I realized that people, including myself, were not saying, “I just bought an item on eBay.” They were saying, “I just won an item on eBay.” It was the thrill of the hunt. I bought a car on eBay.

Wired: What kind of car?

Meeker: Nissan Xterra, pre-owned.

Wired: Is that hands-on philosophy built into the investment strategy here at KP?

Meeker: Yes. In the Digital Growth Fund, we have a rule: For every company that we invest in, someone here is assigned to get to know and use the product intimately and well. But that can’t be the person who leads the investment—or even the person who happens to be most passionate about the product. For instance, we have an investment in Zynga, but we didn’t want Bing Gordon [a Kleiner VC who is legendary in the gaming world] to be the Zynga guy. Instead, Bing was assigned to get to know Codecademy. Every six months or so, Bing will spend 15 minutes updating us on Codecademy from an independent perspective. Then, if there’s something there that can be helpful, we send the report to the company.

Meeker’s Great Hits (and One Miss)

For almost as long as there has been a consumer Internet, Mary Meeker has ruled over it, routinely picking some of the industry’s most successful stocks. And despite weathering a few big misses—and a securities investigation—she’s been better than anyone else at identifying trends and predicting how the Web would develop. Below, a selection of her most important calls.—Elise Craig

1993

Two years after joining Morgan Stanley as an analyst, Meeker joins forces with Kleiner Perkins’ John Doerr to underwrite Intuit’s IPO. By October 1995, Intuit’s market value is up 330 percent.

1994

A New York Times article persuades Meeker to set up a meeting with Jim Clark and Marc Andreessen; a year later, Morgan Stanley leads Netscape’s IPO, an event that heralds the dawn of the Internet Age.

1995

Meeker cowrites her first report on the state of the Internet, proclaiming email the net’s “killer application” and predicting that “browsing through information services” will be the next breakthrough.

2000

>Meeker advises Time Warner on its merger with AOL and the next year calls the behemoth “our best money- making idea.” By the summer of 2002, the stock price dropped 80 percent.

2004

Meeker’s search-engine analysis and relationship with Google cofounders Sergey Brin and Larry Page help Morgan Stanley land a lead underwriter position in the Internet company’s $1.7 billion IPO.

2009

Meeker’s Mobile Internet Report, published in December 2009, claims “more users may connect to the Internet via mobile devices than desktop PCs within five years.” A year later, smartphones outsell PCs for the first time.

Wired: During the boom of the late 1990s, you became known as one of the biggest boosters of tech stocks, throwing coal on the fire. How do you view that period now?

Meeker: The coal observation is yours. I disagree with that. Investment cycles have consistent patterns. At first nobody believes. Then people start to believe. Then there’s an inflection point—and a lot of people believe. Then you’ll have a boom, and then you’ll have a bust. If you go back and read through our stuff, we wrote it again and again: We believed there would be a handful of companies that would create a huge amount of wealth. In a typical year, there are generally two technology companies that go public and become 10-baggers, which means they deliver a 10-times return on investment. We were trying to find those two companies. And when you look at our aggregate returns, we did pretty well.

Wired: Are any of your bubble-era bets painful to look back on?

Meeker:@Home did not do well. Homestore was a huge disappointment. It’s one thing to be wrong about the valuation and the timing. It’s another thing to be wrong about the business model, and in the case of Homestore and @Home we just got the business model wrong.

“It’s one thing to be wrong about the valuation. It’s another to be wrong about the business model.”

Wired: Are we in another bubble?

Meeker: I don’t feel like we have a bubble in the public markets, but I do feel like there are certainly big pockets of excessive value in the private markets. Public market valuations are lower than private market valuations, and that shouldn’t be the case. There will be a lot of companies that don’t live up to their valuations.

Wired: Why leave Morgan Stanley and Wall Street to become a venture capitalist?

Meeker: I always wanted to invest. The Kleiner team had been talking to me for a decade about joining, and I thought that if I didn’t do it now I never would. It seemed like I had a lot of relevant experience to apply to a new cycle, a new group of growing companies. I’d seen the movie before in the 1980s, the 1990s, and the 2000s.

Wired: And what have you learned so far?

Meeker: Venture capitalists work harder than I thought they did.

Wired: How do you decide whether to invest in a company?

Meeker: It’s pretty basic. Is there a huge market opportunity? Is there a great management team? A great product or service? In that sense, it’s not much different than it was for me at Morgan Stanley. We probably passed on a thousand IPOs, and what determined that was not just the material numbers but the entrepreneur. It’s a little bit like being a talent scout.

Wired: How do you discern who’s talented?

Meeker: John Doerr says you have to separate the missionaries from the mercenaries. In the good ones, there’s an unbelievable product passion. Daniel Ek at Spotify is a great example. If you ask him a question, he’s got an answer, he’s already thought it through. When he doesn’t know something, he figures out how to find out.

Wired: Last year you did a report called USA Inc., analyzing the United States as if it were a corporation. You concluded that America was losing its edge and predicted a bleak financial outlook unless we change course. How did that come about?

Meeker: In October 2007 I was living in New York, and it became clear that this mortgage thing might be a bigger problem than we knew. In that year’s Internet trends report, we included a slide that said something like “There’s a mortgage issue. Pay attention to it.” And then the next year, when we were in the darkest moments of a financial crisis, I felt I had a responsibility to talk about it. Joe or Jane Internet entrepreneur, you may not think that you need to care about unemployment levels or GDP growth, but you actually do, because it will impact your business. The theme of that presentation was “Hope for one bad year, plan for five.”

After that, I asked Liang Wu, an associate on our digital team, how long it would take to put together a 10-year income statement for the United States of America, just like we do for Google. He said it would take three to four hours. So he did it, I looked at it, and I said, “Oh my gosh. People need to think about this.”

Wired: One of the points you make several times is the scope of government entitlements like Social Security, Medicare, and Medicaid—which you show accounted for 57 percent of federal expenses in 2010.

Meeker: Yeah. And that’s embarrassing. I’ve paid a lot of taxes, and it was only when I looked at that income statement that I understood where my taxes go. And if I could, I would allocate my taxes differently. I’d continue to allocate them for the security of our country, first and foremost. I want to make sure we have a vibrant ecosystem for our future growth, and that includes jobs and education. And for Americans who need help taking care of themselves, let’s allocate funds as effectively and efficiently as possible, and do whatever we can to help them help themselves.

Wired: Is Silicon Valley out of touch with the rest of the country?

Meeker: It depends. There are a lot of immigrants in Silicon Valley—from other countries and other parts of the United States. The kid from Syracuse who works at an Internet startup in San Francisco gets what’s going on in America. The kid whose upper-middle-class father was laid off from a financial services company in 2008 gets it.

Wired: You’re one of those immigrants yourself.

Meeker: I grew up in a small town in northeastern Indiana. I had an all-American childhood. And I grew up as an optimist. My dad was in his fifties when I was born. He volunteered to go to World War II when he was in his forties. The first time he left the country was on a ship out of San Francisco going to Japan—he saw the world and brought back a lot of optimism. He was a successful lawyer and businessman in the steel industry. So I was fortunate to grow up with the steel industry in the United States during a great growth time. I grew up believing that one person could make a difference. In Indiana, you saw that with basketball. The small town could beat the big town, like in the movie Hoosiers. That is one of the things that attracts me to entrepreneurs.

“A lot of college grads don’t feel entitled. They feel they need to make their own way.”

Wired: Life is good for entrepreneurs, but what has Silicon Valley done for the rest of the country?

Meeker: I think people’s lives are better because they have access to all this information at a very low cost. Entertainment is cheaper, it’s easy to get help, it’s easier to stay out of trouble. I believe that technology has made what has been a very difficult time less bad.

And there’s a second part. Silicon Valley is different than it has been in the past. Compare the Oracle team in the 1980s—very sales-driven—with the Facebook management team, for whom changing the world is more important than selling ads. There’s a different ethos and a different mindset, A lot of really talented recent college grads have been humbled. They’ve seen stuff happen to their parents or their older brother or their family in a difficult economic time. They don’t feel entitled, and they feel that they need to make their own way. These kids are creating some unbelievable stuff.

Wired: You see that in people coming in here for funding?

Meeker: Yes. Consider this quote from Mark Zuckerberg in the S-1 letter. [She pulls it up on her iPad.] “We hope to rewire the way people spread and consume information.” Now, that is the most arrogant thing I have ever heard. But he’s got more than 900 million users and he may be right. We may look back on that in five years and think that he wasn’t ambitious enough.

But the most powerful mission statement to me was Google’s—”to organize the world’s information and make it universally accessible and useful.” We were involved in that IPO, and I had to ask myself: “Are we in?” We could have said no. But I remember thinking, “Oh my God, they may be able to do this.”

Wired: That was a rocky IPO, with two very unusual founders demanding an unusual process.

Meeker: Yeah, they’re quirky. There’s a stubbornness that was frustrating and a lack of willingness to be persuaded. There’s a common thread of stubbornness among the great entrepreneurs. But they have an ability to listen. I thought Microsoft would give them a run for their money and their margins would go down after a couple of years. That never happened.

Wired: You are a woman in a field where prominent women are in the minority. What’s your view on the increasingly vocal complaints about this underrepresentation?

Meeker: No one forced me to focus on technology. I just did it because I had a passion for it. When I started, there weren’t a lot of women role models. It was Carol Bartz, Judy Estrin. I think there’s been a lot of progress since then, and I think that if women have a passion and really want to succeed, they can. On a relative basis, the male-female ratio is certainly skewed to men, but on an absolute basis, there are a lot of very successful women in technology.

Wired: Kleiner Perkins now faces a very public sexual discrimination case. Are you concerned about the reputation of the firm?

Meeker: It’s a lawsuit. I can’t talk about it.

Wired: Several times during this interview, you’ve looked up material on your iPad. When are you not with your iPad?

Meeker: Rarely. When I’m playing golf.

Wired: One final question. How do you feel about being called the Queen of the Net?

Meeker: Better the queen than the grandmother! Every once in a while I try to pull rank. I’ll be in the pantry, and three people are waiting for the cappuccino machine, and I’ll say, “Excuse me, it’s the Queen of the Net—can I step in front of the line?” There are worse things to be called.